2015 the banner year for real estate investing
The first issue of The Freeman this year bannered on its front page that real estate will be the next big thing in 2015. While I am one of those who agree with the prediction, skeptics think this may not be the year yet, while doubting Thomases conversely, foresee the beginning of a property bubble in which I made a lengthy discussion in this column last year why a property bubble is not likely to happen. And I would like to cap them off with some basic concepts about the cause of a property burst specially for people who would like to try investing in real estate this year.
First, a bubble happens when there is an unnatural surge of property prices caused by speculation. Speculators, in real estate investing, are also flippers who buy properties at low prices then sell them higher in a year or two. But property speculators operate in a different way in that, they do not only buy by the bulk, the properties they bought are resold many times in that the last to own are unable to resell or rent them out because of their unreasonably high prices. And this is what’s happening in China now where you’ll see ghost towns of untenanted real estate. Second, a property burst is also brought about by a bad economy where buyers can no longer pay off their mortgage due to joblessness or unfruitful business.
A bubble is far too likely to happen (this year and in the short term) because property buyers in the Philippines are not speculators or flippers but are mostly investing for the long term and for end use. More than sixty percent of the buyers are also Overseas Filipino Workers (OFW) many of whom do not only have stable jobs but are also well paid. And since OFWs work out of the country, they’re the least affected even if the (our) economy is down.
So let’s put aside property bubble for now. If you’re looking to invest your hard-earned money this year, then real estate is your best bet. I would like to believe so because the demand is clear. If the Chamber of Real Estate Builders Association (CREBA) has it, there are already close to 4 million families who need housing to date and many of them will be renting. This means, if you invest your money on a condo, by way of a bank loan, renting out your condo would be good way to help you cover your mortgage payments.
Renting out your condo is not so difficult nowadays as there are already property professionals who can handle them for you. Rent.ph (www.rent.ph) is one of those companies that can assist you with the marketing and even as far as property management so you don’t have to worry about where to look for clients or to take care of your property while you’re busy with work or too far to take care of your condo’s day to day operations.
2015 is a banner year for real estate investors because of ongoing infrastructure developments which are expected to spur current homeowners to invest in second or third homes according to Gulf News. Areas of interest are focused on properties near commercial centres, including Makati, Bonifacio Global City and other parts of Metro Manila. Other preferred locations: Laguna, Bulacan, Cebu, Davao, Boracay, Bacolod, Ilo-ilo and Cagayan de Oro, are also popular. Investing in Philippine property today is ideal for Filipino and international investors as prices are likely to soar substantially in the coming years.
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